Although AMZN got walloped on Friday after missing earnings estimates, Wall Street barely missed a beat. In fact, the Dow touched a new record high as usual and looked eager to go still higher when trading resumes on Monday. AMZN’s dramatic peak occurred at 1083.31, matching exactly-to-the-penny a bull market target I’d initially drum-rolled in early June. The target stood to be an important one, since it had been 16 months in coming. And because AMZN itself is arguably one of the most important companies in the world, a top in the stock could well augur one in the broad stock averages.
As of Friday, however, although AMZN dragged down the S&P 500 and the Nasdaq, it didn’t curtail buying in DJIA stocks, as I’ve noted above. My gut feeling is that this ‘divergence’ will soon be reconciled in bullish fashion, with the Dow carrying the day. Even so, I’d be surprised if AMZN gets instantly back in bullish gear, since Friday’s plunge will have temporarily scared off more than a few buyers. But it’s also going to attract bargain hunters, raising the prospect that Friday’s lows will hold. In addition to the foregoing, VXX, which tracks short-term volatility in the S&Ps, still has much lower to go if it’s going to achieve the 10.24 target I’ve forecast for it. Were that to occur, it presumably would be driven by the same kind of ratcheting, wafting rally that has propelled U.S. shares higher for years.